Housing Market Predictions 2022: What does the new year have in store?

With the end of 2021, we say goodbye to a chaotic year for the housing market and look forward to more stability. Prices have jumped suddenly to reach staggering all-time highs, we’ve had stamp duty holidays, surprise value boosts from lockdown and even more shocking rate rises out of the blue.

Against this background, it may come as a relief to many that 2022 will see something of a return to normal. Mortgages will remain relatively cheap interest-wise, while price growth will hit a steadier pace and the international market will become more accessible once again.

Mortgage rates to remain low after Bank of England bump

The most important prediction to mention is that mortgages will remain relatively cheap, even as the central bank begins to bump up the base rate from record-shattering lows. A lot was made of the sudden jump in the base rate, which mortgage interest is based on, from 0.1 to 0.25%. This is a bump in a journey that has seen far higher peaks though. According to many advisors though, there’s little reason to shy away from getting a mortgage in 2022 and the coming months will remain a good time to borrow and fix rates.

To put this whole situation into context, fifteen years ago, the base rate of interest stood at five percent – 20 times higher than it is now. Now remains a good time to take out a mortgage and while the rates bump is a good reason for many in the financial world to get anxious, it ought not to be much of a cause for concern among those considering mortgages yet. This rise could signal more to come though, so take this into consideration.

Relief for homeowners

The Office for Budget Responsibility (OBR) has revised its housing price growth forecast upward following continuing high demand. 2022 was to be the year when price growth took a tumble through the floor, dropping to below minus two percent after a hectic period of big rises and sudden drops. In March, the OBR forecast this reversal to begin this winter after the end of the stamp duty holiday. However, this never happened.

The fact is people have continued to buy through the winter, taking advantage of low interest rates to satisfy a demand for larger houses to lock down in. This has led the OBR to raise their predictions so that growth will drop heavily – from 8.6%% in 2021 to around 3.2% in 2022 and just 0.9% in 2023, but not stop altogether. This is good news for homeowners and investors. A sharp boom and bust has been replaced by a much gentler flattening of the curve with ongoing, gentle growth.

Small comfort for first time buyers

For first time buyers and the upwardly mobile, there is some good news on the horizon after a winter of discontent. The end of the price explosion is set to bring about a period of stability over the coming years that will make buying in and moving up feasible again. This comes after a period where the predictable end of the stamp duty holiday was soured further by a surprise hike interest rates that brought an end to the super-easy mortgage.  Now the housing market will look much more like it has in past years; stable but challenging. For some, this will be a refreshing change from the hectic ups and downs that have made planning difficult, but others will face challenges in the near future.

Return to a happy normal for the international housing market?

If the British housing market has been up and down recently, the international housing market has been on a roller coaster: Acres of unused holiday real estate have combined with remote working visas available in Spain, Bali, Barbados and beyond to make dreams come true for those who aren’t tied down. Meanwhile, the effect of post-Brexit policy jams and covid-based travel restrictions have been a nightmare for more traditional international owners.

The good news here is that while the upside continues to look very shiny for digital nomads and those with flexibility, the down side may be getting easier. Many countries that locked down their borders in autumn are rapidly moving toward reopening thanks to improved covid responses and hints of lowering risk from new variants. Though nothing is certain in the short term, this is a trend that will continue further in the future as boosters are administered and combative technology is pushed further. Spain, Switzerland, New Zealand and Canada are the favourite future holiday home hot spots as traditional favourites mix with countries that responded well to the pandemic and now look attractive as a result.

Spain in particular has been responding to popularity by working out new ways for Brits to live there after Brexit, with new visa rules and ways through the red tape.

Overall, there’s a  great deal to be positive about as we begin 2022.

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